BUSINESSBUSINESSMonday 11 December 2017

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Brightening outlook for GCC

countries: UBS

Qatar-Indonesia trade volume reaches QR1.8bn

Dow & Brent before going to press

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Dr Al Sada attends OAPEC meeting in KuwaitThe Peninsula

The Minister of Energy and Industry H E Dr Mohammed bin Saleh Al Sada and his accom-panying delegation

participated at the 99th Ministe-rial Meeting of the Organization of Arab Petroleum Exporting Countries (OAPEC) held in Kuwait yesterday.

The meeting’s agenda included reports on global oil conditions, environmental and climate-change issues. It also included reports on OAPEC Sec-retariat activities in various fields, functions organized by the Sec-retariat, studies and surveys it had conducted, and progress achieved so far in the OAPEC databank.

Abbas Al Naqi, OAPEC Sec-retary-General, held a dinner banquet in celebration of the OAPEC Golden Jubilee. Members of the Council of Ministers and country representatives to the Executive Bureau were acknowl-edged during the ceremony.

The OAPEC is a regional inter-governmental organisation

established by an agreement signed in Beirut on January 9, 1968 by Kuwait, Libya and the Kingdom of Saudi Arabia. The three founding members chose Kuwait to be the Organization’s headquarters.

Kuwait’s Oil Minister Essam Al Marzouq said that Opec and other oil producers will study before June the possibility of an exit strategy from the global oil supply-cut agreement.

“There are still meetings every couple of months for the ministerial monitoring commit-tee, and there will be a study formed for the possibility of an exit strategy... before June,” news agency Reuters reported the min-ister as saying.

The Organization of the

Petroleum Exporting Countries (Opec) and non-Opec producers led by Russia have agreed to extend oil output cuts until the end of 2018 as they try to clear a global oil glut while signalling a possible early exit from the deal if the market overheats.

Opec meets next in June, while the next meeting for the minister ial monitoring

committee, known as the JMMC, is due to be held in January in Oman.

Russia, which this year reduced production significantly with Opec for the first time, has been pushing for a clear message on how to exit the cuts so the market doesn’t flip into a deficit too soon, prices don’t rally too fast and rival US shale firms don’t

boost output further.Moscow needs much lower

oil prices to balance its budget than Opec’s leader Saudi Arabia, which is preparing a stock mar-ket listing for national energy champion Aramco next year and would hence benefit from pric-ier crude.

Russian Energy Minister Alexander Novak said on

Wednesday that it was too early to talk about a possible exit from the global deal to cut oil produc-tion, and the eventual withdrawal from the agreement should be gradual. Novak said the process of exiting the deal may take between three and six months, depending on how the global oil market has recovered by then, and on the scale of oil demand.

Satish Kanady The Peninsula

The US federal tax reform is expected to add value to Qatar’s investments in

the US. Qatar has significant exposure to various asset classes, which are expected to benefit from the sweeping tax overhaul, according to Doha-based investment strategists.

The tax bill passed by republicans in the US Senate is expected to boost profits of cor-porate. The centerpiece of the existing legislation is a reduc-tion in the corporate income tax rate to 20 percent from the cur-rent 35 percent.

Qatar’s sovereign wealth fund and some family busi-nesses are largely exposed to the US investment industry. Back in 2015, Qatar Investment Authority (QIA) had committed $45bn investment in the US. Recently, QIA announced that it had deployed more than 50 percent of its committed fund.

In the real estate sector, QIA has prioritised its investments. It has also exposure to the US industry, alternative energy and technology. According to infor-mation available on public domain, QIA has also extended

its portfolio to health sector. Drug and biotechnology com-panies would be among those benefiting hugely from paying a reduced tax rate.

“Qatar has significant expo-sure to US market, especially in the real estate and equity mar-ket. Either way both asset classes will benefit from the tax reforms. The reforms will be a boost for the equity investments and other asset classes. And this will add value to Qatari invest-ments over there”, Talal Samhouri, Head of Asset Man-agement, Amwal told The Peninsula.

According to Bank of Amer-ica Merrill Lynch (BofML) Research team, of Qatar’s com-bined sovereign wealth fund, a significant share is in listed stra-tegic foreign stocks. Excluding domestic assets and real estate, BofML believes that QIA’s two-thirds of the portfolio could be private equity. Assets manag-ers believe this asset class will benefit from rising equity mar-kets, as higher prices increase the value of the holdings they manage and improve the per-formance of their funds.

Private equity firms are pri-marily watching proposals to limit the amount of interest

expense they can deduct from portfolio companies’ taxable income, according to market experts.

However, it’s not all rosy for GCC investors. Airlines in the region are worried that the tax reforms have provision to tar-get them. One Middle East carrier has accused US airlines of using tax overhaul to ‘pun-ish’ Gulf carriers. The Middle Eastern airlines say a provision included in the bill can wreak havoc on international travel.

“The prospective headline cut to the US corporate tax rate from 35 percent to 20 percent is a positive but not as signifi-cant as it may look at first sight. Historically, the US corporate sector has enjoyed an effective tax rate closer to 25 percent due to ample scope for deductions. The US Congressional Budget Office believes that the total revenue lost from the US busi-ness taxes from the Senate tax bill would be $744bn over 10 years. Following implementa-tion, this would represent approximately a 6 percent increase in net income for the US corporate sector from 2019,” noted Alastair George, invest-ment strategist at Edison Investment Research.

Minister of Energy and Industry H E Dr Mohammed bin Saleh Al Sada (third left) with other ministers and top officials of OAPEC, in Kuwait yesterday.

Exit strategy

Opec and other oil producers will study before June the possibility of an exit strategy from the global oil supply-cut agreement.

US tax reforms to add value to Qatar investments

WTO meet opens in Buenos AiresBuenos Aires

AFP

The World Trade Organiza-tion opened a conference yesterday under the cloud

of US hostility to multilateral trade accords. The 164-member WTO is also wracked by disa-greements over China and has been struggling to kickstart stalled trade talks.

The Buenos Aires meeting, which lasts through Wednesday, is the first in the era of US Pres-ident Donald Trump, who has pummeled the body relentlessly since taking office, even describ-ing it as a “disaster”.

The Trump administration has made the WTO a preferred

target of its “America First” pol-icy, threatening to pull the US out of the trade organisation it says is hampering its ability to compete.

Trump has already with-drawn the United States from the Trans-Pacific Partnership and insisted on renegotiating the North American Free Trade Agreement with Mexico and Canada.

WTO Director-General Rob-erto Azevedo said yesterday he will ask US Trade Representa-tive Robert Lighthizer for “political commitment, political will and flexibility.”

“Without flexibility we will not get anywhere,” Azevedo said at an opening press conference

at a Buenos Aires hotel.Expectations for any kind of

a breakthrough at the Buenos Aires meeting are low.

For the past decade the WTO has failed to make progress in the so-called Doha Round of trade liberalisation talks, which began in 2001.

The WTO is also accused of failing to do enough to resolve problems that some of its mem-bers have with China.

“There is life after Buenos Aires,” said the president of the conference, Susana Malcorra of Argentina.

She has said a deal was likely to end harmful fisheries subsidies, of keen interest to developing countries.

Roberto Azevedo (right), WTO Director-General; and Susana Malcorra, chair of the 11th Ministerial Conference of the WTO, addressing the media in Buenos Aires, Argentina, yesterday.

$57.36 $57.36 -0.01-0.01

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7,393.96+73.21 PTS

1.00%

7,827.71+54.12 PTS

0.70%

24,329.16+117.68 PTS

0.49%FTSE100QE DOW

22 MONDAY 11 DECEMBER 2017BUSINESS

People walk next to a low-cost TGV high-speed train “Ouigo” at Paris Montparnasse-Vaugirard railway station in Paris, yesterday. France’s state rail firm SNCF opened its online booking service for its new budget train service ‘Ouigo’ inspired by the budget airline model.

Budget train

Qatar-Indonesia trade volume reaches QR1.8bn Mohammad ShoebThe Peninsula

The volume of bilateral trade between Qatar and Indonesia reached QR1.8bn in 2016, which is expected to

surge further in the coming days as both sides are working closely to expand and deepen the level of bilateral cooperation, said a top official of Qatar Chamber (QC) at a forum yesterday.

Companies from both sides are also working to establish partnership agreements and joint ventures to participate in the implementation of several devel-opmental projects in Qatar and beyond for mutual benefits.

Indonesia is one of Qatar’s favourite destinations for invest-ment. Qatari investments in Indonesia include Nebras Power, Indosat , and a QNB branch.

QC, the country’s largest and oldest private industry repre-sentative body hosted the Qatari-Indonesian Business Forum at its headquarters, which

was attended by prominent Qatari businessmen, the visiting members of trade delegation from the South-East Asian nation, and representatives from local businesses from both side.

Helmy Shebubakar, Vice-Chairman of Indonesian Chamber of Commerce, headed the Indonesian side.

Ali bin Abdulatif Al Misnad, Board Member and Honorary Treasurer of QC, in his welcome address at the meeting, said: “I wish your visit ends with fruit-ful outcomes and contributes to fostering relations of the private sectors in both friendly countries.

I’d like also to thank all Qatari businessmen who joined us today to look for new

horizons of cooperation with their Indonesian counterparts.”

Al Misnad added that Indo-nesia is one of Qatar’s most important countries in South-East Asia region.

Negotiations for many infra-structure projects in roads, power plants, ports, mining, and c o m m u n i c a t i o n s a r e underway.

A couple of months ago, the Emir H H Sheikh Tamim bin Hamad Al Thani paid a very suc-cessful visit to Indonesia, where a bevy of agreements and Mem-orandum of Understanding (MoUs) were signed in many fields.

On the sidelines of the visit, and during the Qatari-Indone-sian Economic Forum an MoU was signed between Qatar and Indonesian Chambers for future cooperation.

“There is doubt that Qatar has successfully managed to overcome the impacts of the unfair siege imposed by some of the Gulf countries thanks to the strong Qatari economy and its

external relations with friendly countries, such as Indonesia, Qatar dealt with the crisis very quickly.

New direct marine routes are launched to connect Hamad Port with several ports in the world,” noted Al Misnad.

He added that the private sector played a key role in the siege. Qatari businessmen

exerted great efforts to find alter-native sources to ensure the continuing flow of goods with-out any interruption.

He reiterated that the siege didn’t affect Qatar’s ongoing developmental activities, includ-ing the Qatar’s mega projects. All construction works for the FIFA World Cup 2022 and infrastruc-ture projects are progressing

normally as per the schedule.Al Misnad also said that the

Chamber is pleased to welcome Indonesian companies to take part in these projects and urged both countries businessmen to establish joint ventures that ben-efit both countries’ economies. There are a wide range of coop-eration opportunities between us.

Deepen ties

Both countries are working closely to expand and deepen the level of bilateral cooperation.

Ali bin Abdulatif Al Misnad (right), Board Member and Honorary Treasurer of QC; shake hands with Helmy Shebubakar, Vice-Chairman of Indonesian Chamber of Commerce, during the Qatari-Indonesian Business Forum, at Qatar Chamber head quarters, yesterday.

Just Real adds new villa projects to its portfolioThe Peninsula

Just Real Estate (JRE), the lead-ing property service provider in Qatar, has once again dem-

onstrated how it is at the forefront of exceeding the nation’s real estate requirements by expanding its diverse portfo-lio with the launch of three new luxurious villa projects.

As Qatar’s population con-tinues to grow, demand for property continues to rise. According to worldometers.info, an international statistics pro-vider, Qatar’s population is set to grow by 2.11 per cent in 2018, to reach 2.7 million, which places extra demand on the real estate sector.

And emphasising its stature as a key driver in the develop-ment of Qatar’s property market, JRE has added to its portfolio four state-of-the-art compound villa projects, Castilla, Tulip, Messila, and Wadi Al Wasaah, each focused around luxury,

modern family living. “As the leading property service pro-vider in Qatar we constantly monitor, analyse and react to, and anticipate shifts in, the rap-idly evolving market dynamics. We have a diverse portfolio of property solutions to meet all consumer needs, and the addi-tions of these three world-class projects, designed to provide the complete living environment, further enhance our appeal and offering for tenants, buyers and investors,” said Nasser Al Ansari, Chairman, JRE.

The latest additions to the JRE portfolio include Castilla, a prestigious compound develop-ment offering tenants luxury living at an affordable price. The project features a total of 38 5-bedroom villas, fully furnished with the latest modern furnish-ings and finished to the highest standards.

A select number of the villas on offer have an additional out-side room. The Castilla

compound offers a great loca-tion in Al Gharafa, just five minutes’ away from a number of high-class, destination shop-ping malls and a range of international schools. Castilla offers a true community ambi-ance and experience and features a stylish modern club-house, swimming pool and fully-equipped high-spec gym. Twenty-four security and on-site maintenance add to the appeal of this f ine development.

Tulip is an exquisite, exclu-sive 250 square-metre development featuring 24 stun-ning 4-bedroom, plus maid’s room, properties semi furnished villas. All bedrooms in these lux-ury villas are master bedrooms. Located just behind Gulf Mall and a few minutes from malls and schools, Tulip offers the added privacy and peace-of-mind with 24-hour security and on-site maintenance and is cen-tred around family living with

state-of-the art gym, modern clubhouse and swimming pool amongst its many facilities.

The Messila compound is sit-uated in a prime location in the up-and-coming Doha district of Messila. Consisting of 126 villas, each offering 3 bedrooms plus maid’s room across a 3-storey layout.

Wadi-Al Wasaah is a secure, gated community featuring exquisite, large 4-bedroom vil-las which are fully-furnished and ready to move in. In addi-tion to 4 bedrooms, the villas also have a maid’s room. Designed to accentuate the spa-cious layout, the open-plan living and dining areas within the villas promote a relaxed, soothing ambiance.

“The addition of these four developments once again strengths the profile of our port-folio and we are confident they will draw a lot of attention and will be a big success,” added Al Ansari.

Omantel wins TMT M&A Emerging MarketsTelecom Deal of the YearThe Peninsula

Oman Telecommunica-tions (Omantel) was awarded TMT M&A

Emerging Markets Telecom Deal of the Year for 2017 at the TMT Finance M&A Awards held in London, recently.

The Award was presented to Omantel for their 22 percent acquisition of a stake in Zain Group for a total value of $2.2bn. Omantel is now the second larg-est shareholder in Zain Group. The new combined group becomes the third largest tele-coms group in the MENA region, with 52 million customers.

“We are very proud to have been recognised by TMT Finance and experts across the sector in this way. The award is a

reflection of the vision we have set for Omantel and the dedica-tion and hard work of the entire team,” said Talal Said Al Mamari, Chief Executive Officer at Omantel.

This year, the TMT M&A Awards were held during the TMT Finance World Congress 2017, which convened leading telecom infrastructure opera-tors, private equity investors and investment bankers to share strategic insights related to investments and explore part-nership opportunities. The congress also convened key speakers, such as C-level exec-utives from the primary active telecom operators, investment banks, investors and advisers in the Technology, Media and Tel-ecom sector.

Sudan puts temporary ban on 19 importsKhartom

Reuters

Sudan has imposed a tem-porary import ban on 19 selected foods and other

items in an effort to protect its currency and narrow its budget deficit after the end of US trade sanctions in October, the

government said. The Sudanese pound has been weakening against the dollar since Wash-ington lifted 20-year-old economic embargo, paving the way for traders to step up import volumes and putting pressure on already scarce hard currency.

The central bank holds the official exchange rate at 6.7

pounds to the dollar, but a low supply in formal channels have meant traders have had to rely on Sudan’s black market for dollars.

Meat products, fish and fresh produce were among the 19 items included in the temporary ban the trade ministry signed, according to a statement.

Macron’s ‘real world’ climate summit to focus on financeParis

AFP

Two years to the day after 195 nations adopted the Paris Agreement, French

President Emmanuel Macron will convene a follow-up climate summit tomorrow to jump-start the lagging transition to a greener global economy.

Launched in part to counter US President Donald Trump’s decision to exit the landmark 2015 treaty, the One Planet Sum-mit -- co-sponsored by the United Nations and the World Bank -- will centre on how to finance the shift in developing countries trying to simultane-ously reduce their carbon footprints, adapt to climate change impacts, and accommo-date growing populations.

“The focus on finance is par-ticularly timely because that was the area we had the least progress-on at the COP23,” said Alden Meyer, a climate policy expert at the Washington-based Union of Concerned Scientists, referring to the “Conference of the Parties” UN negotiations in Bonn last month.

Some 50 world leaders are set to attend the Paris meeting,

including Mexico’s Enrique Pena Nieto, Theresa May of Britain, Spain’s Mariano Rajoy, Euro-pean Commission President Jean-Claude Juncker, and numerous African leaders.

UN Secretary-General Anto-nio Guterres will also be in attendance, along with minis-ters from China, India, Canada.

Officially, the United States -- which helped seal the Paris deal under Barack Obama -- will be represented by a low-level official from the Paris embassy.

The Paris Agreement calls for capping global warming at “well under” two degrees Cel-sius (3.6 degrees Fahrenheit), and at least $100bn per year, from 2020, in climate finance to poor nations. So far, neither commitment is assured.

Voluntary national plans, annexed to the treaty, to cut greenhouse gas emissions would still result in a rise of 3 C by cen-tury’s end, a recipe for human misery on an unprecedented scale, scientists say.

With only a single degree Celsius of global warming so far, the planet has already seen a crescendo of deadly droughts,

heatwaves and superstorms engorged by rising seas.

Ramping up financial flows to the developing world is also not on track, especially when long-term needs -- beyond the 2020 horizon -- are taken into account.

“One of the big topics in Paris next week is the need to scale up financing, which is still not nearly enough to meet the Paris commitments,” said World Bank President Jim Yong Kim.

More broadly, the Interna-tional Energy Agency has estimated it will take $3.5trillion a year in investments until mid-century to contain the rise of global temperatures and retool the global economy.

Macron’s team foresees a dozen “major announcements” during the summit.

A new “Transport Decarbon-isation Alliance” may, for the first time, constrain the rapidly expanding shipping sector, which -- if it were a country -- would be the 7th or 8th largest CO2 emitter.

“This is the real world, with leaders and ministers and busi-ness leaders and NGOs coming to talk about what’s happening in the real economy,” said Meyer.

23MONDAY 11 DECEMBER 2017 BUSINESS

Brightening outlook for GCC countries: UBSThe Peninsula

UBS Wealth Manage-ment foresees 2018 positive on global equities relative to high-grade and

developed world government bonds. Global economic growth should continue at the high 3.8 rate witnessed in 2017.

For the six countries that form the Gulf Cooperation Coun-cil (GCC), the economic outlook is brightening. Oil prices have recovered since June, but are expected to trend sideways next year. Further reforms are needed to diversify GCC members’ econ-omies and attract foreign investment.

Nevertheless, investors face changing monetary, political, technological, social, and envi-ronmental contexts, with three principal risks to the bull mar-ket: a significant rise in interest rates; a US-North Korea conflict; and a China debt crisis.

UBS foresees a changing context for portfolios in 2018. The year 2017 has been the strongest for the global economy since 2011. Next year, growth is likely to stabilize at 3.8 percent, providing a benign backdrop for stocks.

However, investors should be alert to emerging opportuni-ties and risks resulting from monetary tightening, heavy political calendars, technologi-c a l d i s r u p t i o n , a n d environmental and social change.

Ali Janoudi (pictured), Head of Wealth Management Central and Eastern Europe, Middle East and Africa, France and Benelux International at UBS Wealth Management, said: “GCC coun-tries are still adjusting to the new economic reality of lower oil prices, despite the recent recov-ery. Ambitious reform plans across the region are balancing the need for a more broad-based, diversified economy with respect

for local traditions. We think the progress achieved so far bright-ens the region’s outlook and expect GDP growth to rebound to 2.3 percent in 2018 from 0.6 percent this year.”

Mark Haefele, Global Chief Investment Officer at UBS Wealth Management, com-mented: “Periods of high economic growth often sow the seeds of their demise. But there is little evidence today of an

impending recession. Histori-cally, recessions have been caused by one or more of: capac-ity constraints, oil price shocks, excessively tight monetary pol-icy, contractions in government spending, or financial crises. None look likely to materialize in 2018. In this environment, we remain positive on equities rel-ative to high-grade and government bonds.”

Central banks will tighten

monetary policy and in some cases raise interest rates in 2018. In certain areas, especially finan-cial services, this will bring opportunities, except in the unlikely event of significant hikes.

But amid rising rates, inves-tors will also need to prepare for higher volatility, higher disper-sion of returns from individual stocks, and in some cases higher correlations between equities and bonds. Conversely, this may benefit alternative and other active asset managers.

Extreme political scenarios, principally a US-North Korea conflict, remain a low-probabil-ity risk for markets. However, politics may have a significant local impact.

Investors can either hedge this by diversifying their portfo-lios globally or by treating it as an opportunity, particularly in the case of longer-term trends such as emerging market infra-structure development.

Likewise, extreme financial outcomes, principally a Chinese debt crisis, are unlikely to mate-rialize in 2018 but worth monitoring. Total bank assets in China are 310 percent of GDP, nearly three times higher than the emerging market average. However, China’s high growth rate, powerful state, and closed capital account make it less sus-ceptible to debt crises. Our base case is for 6.4 percent growth versus 6.8 percent in 2017.

Social, environmental, and technological change continue to present both opportunities and risks. For the stock market, we see the most important long-term tech themes as digital data, automation and robotics, and smart mobility. Investors can also put capital to work in a vari-ety of social and environmental fields across the growing field of sustainable investing, including multilateral development bank bonds and impact investing as well as listed equities.

Central banks

Central banks will tighten monetary policy and in some cases raise interest rates in 2018. In certain areas, especially financial services, this will bring opportunities, except in the unlikely event of significant hikes.

Chinese electric carmaker to open Morocco plantCasablanca

AFP

Chinese electric car manu-facturer BYD on Saturday signed an agreement to

open a factory near the Moroc-can city of Tangiers to build battery-powered vehicles, offi-cials said.

BYD will become the third car manufacturer, after Renault and Peugeot of French, to con-struct cars in the North African state.

The memorandum of under-standing was signed at the royal palace in the coastal city of Casa-blanca in the presence of King Mohammed VI and BYD’s chair-man, Wang Chuanfu, whose company is backed by US inves-tor Warren Buffett.

The factory in the new

Mohammed VI Tangier Tech City, which is part of a project between China and Morocco, is to produce electric cars, buses and trucks at a 50-hectare site employing 2,500 people, accord-ing to the project directors.

A plant for the assembly of electric trains is also planned, but the amount of investment and timeframe of the overall project were not announced.

“We hope to benefit from Morocco’s location as an entry point to Europe and the African market,” Wang said, adding that the first phase would produce cars.

According to industry sources, Morocco aims to add a fourth major automaker plant before the end of 2021 and to have capacity to produce one million vehicles a year by 2025.

King Mohammed VI of Morocco (right) greets Wang Chuanfu, the founder of “BYD auto”, ahead of the signing ceremony between Morocco and the Chinese automobile manufacturer, at the Royal Palace in Casablanca.

France to allow trading of securitiesvia blockchainParis

AFP

France’s finance minis-ter unveiled Friday a decree that would

make it the first nation in Europe to allow the trading of some non-listed securities using the blockchain tech-nology that underpins cryptocurrencies.

The decree, presented by Finance Minister Bruno Le Maire to the government, should enter into force by July at the latest and will apply to non-listed financial securities that EU law doesn’t require to be traded via an intermediary, a market worth potentially more than 3 tril-lion euros.

In particular this includes shares in mutual and hedge funds, negotiable debt secu-rities, and unlisted stocks and bonds.

Blockchain technology debuted in 2009 as a public, encrypted ledger for the dig-ital currency bitcoin.

It has drawn interest from the established finan-cial sector in recent years because of its potential for securely tracking transac-tions, allowing anyone to get an accurate accounting of money, property or other assets.

Blockchains record trans-actions as “blocks” that are updated in real time on a dig-itised ledger that can be read from anywhere and does not have a central recordkeeper. It is considered to be secure as all changes should be made simultaneously among all users.

“The use of this technol-ogy will permit fintechs and other financial actors to offer new solutions for exchang-ing securities, solutions that are faster, cheaper, more transparent and more secure,” Le Maire told journalists.

Fintechs are startups try-ing to shake up the financial sector via the introduction of new technology.

Le Maire said the decree “is a way of telling firms ‘come do live tests here, in a secure legal framework’.”

Becoming the first in Europe to authorise block-chain trading will increase the attractiveness of Paris for fintechs and encourage inno-vation, he added.

China looks to nuclear option to ease winter heating woesShanghai

Reuters

With its smog-prone north desperate to slash coal consump-

tion, China is looking to deploy nuclear power to provide reli-able winter heating, raising public safety concerns - though developers say the risks are minimal.

State-owned China National Nuclear Corp (CNNC) recently conducted a successful 168-hour trial run in Beijing for a small, dedicated “district heating reac-tor” (DHR) it has named the “Yanlong”.

With the north facing natu-ral gas shortages as cities switch away from coal, CNNC pre-sented the “DHR-400” as an alternative heat supplier for the region, with each 400-mega-watt unit capable of warming 200,000 urban households.

The model - which consists of a reactor core immersed in a water-filled tank around the same volume as an Olympic swimming pool - will require 1.5 billion yuan ($226.7m) in investment and take just three years to build, a crucial advan-tage in a sector plagued by construction delays.

As a small and relatively simple “swimming pool” design, the low-pressure reac-tor is expected to be safer than conventional models, with temperatures not exceeding 100 degrees Celsius, and it could be plugged directly into

existing heating networks.The technology is ready,

said Gu Shenjie, deputy chief engineer with the Shanghai Nuclear Engineering Research and Design Institute (SNERDI), part of the State Power Invest-ment Corp (SPIC).

“They (CNNC) have supplied heat to their institute and office buildings and have successfully done that for three years,” Gu told Reuters on the sidelines of the INNCH New Nuclear Build Conference in Shanghai, adding that commercialisation was the next stage.

“I think it’s workable. The parameters are very low and it’s easy to maintain operations,” he added.

While the use of conven-tional nuclear plants to provide heating is common in Russia and Eastern Europe, China aims to be the first country to build reactors dedicated to the task of warming its cities.

China is pumping billions of yuan into advanced nuclear technology that will not only boost domestic capacity but also strengthen its global presence. It aims to develop a portfolio of reactors capable of powering cities, remote islands, ships, cars and even aeroplanes.

With northern China still relying on “centralised” heating systems, a DHR in every city could be an ideal solution, said Cheng Huiping, a CNNC techni-cal committee member.

The firm said the technol-ogy would use only 2 percent of

the radioactive sources used in a conventional 1-gigawatt nuclear power plant, but win-ning public acceptance remains a hurdle.

“We will have to face 500-600 million ordinary people in northern China and tell them that swimming pool reactors are absolutely safe,” Cheng told a conference earlier this year.

The government is keen on the technology, but cautious about deploying it too quickly, especially amid widespread public anxiety about the risks of nuclear power.

Late last month, Liu Hua, director of China’s National Nuclear Safety Administration, acknowledged the DHR was of “great significance” and could help resolve northern China’s energy and environmental problems. But he also urged CNNC to do its utmost to prove safety and reliability.

Cost will also be a major factor.

CNNC said that, at an esti-mated 30-40 yuan per gigajoule, it could end up cheaper than gas, but a nuclear industry consult-ant told Reuters the economics of the DHR was difficult to predict.

The approval process also remains a long one, said Gu at the SNERDI, with each project expected to undergo a battery of environmental impact and c o n c e p t u a l d e s i g n assessments.

“I don’t think it can be done within five years,” he said.

Bitcoin looks like bubble, New Zealand’s central banker warns

Willington

Bloomberg

Bitcoin’s spectacular gains look like a speculative bubble and the cryptocur-

rency is too unstable to be useful in the future, New Zea-land’s central banker said.

“It looks remarkably like a bubble forming to me,” Reserve Bank of New Zealand Acting Governor Grant Spencer (pic-tured) said in interview with TVNZ broadcast yesterday.

“Over the centuries we’ve seen bubbles, and this appears to be a bit of a classic case. With a bubble, you never know how far it’s going to go before it comes down.”

Bitcoin has soared more than 1,500 percent this year, and about 85 percent in just the past two weeks, as people rush to buy the digital currency in the hope it will become a legitimate alternative to gold or traditional money. Trading in bitcoin futures opened early today (2am

Qatar Standard Time), with the first major US exchange offer-ing a product pegged to the wildly fluctuating unit of pay-ment that has no backing from a government or a central bank.

Bitcoin, “mined” by com-puters performing complex calculations, surged to over $16,000 last week, and all bit-coins in circulation are now worth more than New Zealand’s entire $185bn economy. Early investors include the Win-klevoss twins, who played an early role in Facebook Inc.’s for-mation. Cameron Winklevoss said he think bitcoin’s gains have only just begun as it will come to be seen as an upgrade to gold.

“Bitcoin is to me very much like gold,” Spencer said. “It’s mined, it has a fixed quality and the price is very volatile.”

The RBNZ is doing research on demand for New Zealand’s dollar, known as the kiwi, and whether it would be feasible to at some stage replace it with a digital alternative, but Spencer said bitcoin isn’t a template for the future.

“I think digital currencies, cryptocurrencies, are a real and serious proposition for the future. I think they are part of the future, but not the sort that we see in bitcoin,” he said. “I think a cryptocurrency that has a more stable value will be the sort of cryptocurrency that’s more useful for the future.”

24 MONDAY 11 DECEMBER 2017BUSINESS

Iran’s President Hassan Rowhani (right) hands out documents to Parliament Speaker Ali Larijani after presenting his budget for 2018-2019, yesterday in Tehran. Rowhani said overall economic growth would hit 6.5 percent in the fiscal year starting in March 2018, and seven percent with the oil sector excluded. The government has also forecast 6.5 percent growth for this year.

Iran budget

UK aims for trade deal with EU that tops Canada pactLondon

Reuters

Britain is aiming to secure a comprehen-sive free trade deal with the European Union and wants it to

be signed shortly after it leaves the bloc in 2019, Brexit minister David Davis (pictured) said yesterday.

After securing an initial agreement on Friday to move Brexit talks to a second phase, Prime Minister Theresa May is keen to start discussing future ties with the EU, and especially the type of trading agreement to try to offer greater certainty for businesses.

But despite Davis striking a confident tone, EU officials say

they will only launch negotia-tions on a legally binding treaty after Britain leaves and becomes a “third country”, according to draft negotiating guidelines.

“It’s not that complicated, it comes right back to the align-ment point ... We start in full alignment, we start in complete convergence so we can work it out from there,” Davis told the BBC’s Andrew Marr show.

“The thing is how we man-age divergence so it doesn’t undercut the access to the mar-ket,” he said, describing his preferred deal as “Canada plus plus plus”.

The EU has been consider-ing a post-Brexit free trade deal with Britain along the lines of one agreed last year with Canada.

But the UK economy is nearly

twice the size of Canada’s and British officials have said that their current alignment with EU standards and much closer trad-ing links with the continent give them scope for an even deeper relationship.

May has been hailed by many in her deeply divided Con-servative party for rescuing the agreement to unlock the Brexit talks by offering EU member Ireland and her allies in North-ern Ireland a pledge to avoid any return of a hard border.

By playing with the word-ing, May agreed that if the two sides failed to agree an overall Brexit deal, the United Kingdom would keep “full alignment” with those rules of the EU’s sin-gle market that help cooperation between Ireland’s north and south.

Davis described the commit-ment as more of a “statement of intent” than a legally binding measure—something that might reassure hardline Brexit cam-paigners who fear that it could

imply that Britain was leaving the EU in name only. Despite last week’s progress, May will enjoy little respite. The second phase of talks is expected to expose the rifts in her top team of ministers over what Britain should look like once it leaves the EU.

On Saturday, environment minister Michael Gove, a Brexit campaigner, opened up the pos-sibility of changing the terms of any agreement with the EU after Brexit if Britons felt that the deal had not reflected their demands to “take back control”.

“If the British people dislike the arrangement that we have negotiated with the EU, the agreement will allow a future government to diverge,” Gove wrote in a column in the Daily Telegraph.

Canada plus plus plus

UK economy is nearly twice the size of Canada’s and British officials have said that their current alignment with EU standards and much closer trading links with the continent give them scope for an even deeper relationship.

Brexit minister David Davis described his preferred deal as “Canada plus plus plus”.

Tunisian parliament approves 2018 budget including fiscal reformsTunis

Reuters

Tunisia’s parliament approved a 36 billion dinar ($14.55bn) budget

for next year which included a package of fiscal measures to cut the budget deficit.

The budget for the fiscal year that starts on January 1 was passed in parliament with 134 votes out of 217 lawmakers.

It forecasts the budget def-icit to fall to 4.9 percent of gross domestic product in 2018, from about 6 percent expected in 2017.

Tunisia aims to raise GDP growth to about 3 percent next year from 2.3 percent this year.

Tunisia is under pressure from the International Mone-tary Fund to speed up policy changes and help its economy recover from militant attacks in 2015 that hurt its vital tour-ism industry.

The country has been praised as the only democratic success among the nations where “Arab Spring” revolts took place in 2011.

But successive govern-ments have failed to make the changes needed to trim defi-

cits and create growth.The 2018 budget raises

taxes on cars, alcohol, phone calls, the internet, hotel accommodation and other items.

It raises customs taxes on some products imported from abroad, such as cosmetics, and some agricultural products to cut the trade deficit which widened by 23.5 percent year-on-year in the first 10 months of 2017 to 13.210 billion dinars, a record.

The parliament approved a rise of 1 percentage point in value-added tax and imposed a new 1 percent social secu-rity tax on employees and companies.

State social security funds suffer from a deficit of about $1bn as the economy has been in turmoil since the 2011 upris-ing against autocrat Zine El Abidine Ben Ali, according to officials.

Taxes on bank profits will rise to 40 percent from 35 percent.

In April, the IMF agreed to release a delayed $320m tranche of a $2.8bn loan pack-age, on condition that Tunisia raise tax revenue, reduce the public wage bill and cut pop-ular energy subsidies.

Sri Lanka hands over debt-laden port to Chinese ownerColombo

AFP

Sri Lanka handed over a deep-sea port to a Chinese firm, in a deal agreed to

boost the cash-strapped island’s finances that has raised con-cerns at home and abroad over Beijing’s growing influence.

The $1.12bn deal first announced in July lets a Chinese state company take over the

southern port of Hambantota, which straddles the world’s busiest east-west shipping route, on a 99-year lease.

“With the signing of the agreement today the Treasury has received $300m,” Prime Minister Ranil Wickremesinghe said at a ceremony in the capi-tal to mark the handover.

“This is the beginning of our debt settlement,” Wickremes-inghe said, on Saturday.

The loss-making port will now be jointly managed by the state-owned Sri Lanka Port Authority and China Merchants Port Holdings.

Sri Lanka owes China $8bn that former president Mahinda Rajapaksa’s regime borrowed for its infrastructure develop-ment projects, including the port.

The deal has raised con-cerns at home and overseas,

where countries such as India and the United States are known to be worried that China getting a foothold at the deep-sea port could give it a military naval advantage in the Indian Ocean.

On Friday Sri Lanka’s par-liament approved wide-ranging tax concessions for the port deal, including a tax holiday of up to 32 years for the Chinese firm, that opposition parties objected to.

US Fed to hike interest rates as Trump tax cut looms

Washington

AFP

The US central bank is set to raise the benchmark inter-est rate this week, looking

to get ahead of price increases that, though absent so far, are still expected to materialize.

It would be the third rate hike this year, and is over-whelmingly expected by economists and traders, and hinted at by policymakers, even though official data show infla-tion remains well below the Federal Reserve’s two percent target.

With the world’s largest economy growing and near full employment, confirmed by a strong November jobs report on

Friday, the central bank has long been expecting to see signs of inflation in the pipeline.

And now a Republican plan nearing approval in Congress to slash corporate taxes offers a potential juice to the economy that could prompt the Fed to hike rates faster, economists say.

The Fed’s forecast in Sep-tember indicated three rate hikes were likely next year, but any increase in anxiety over fiscal policy and its impact on inflation could be reflected in the revised projections from policymakers that will be released at this week’s meeting.

Since the rate-setting Fed-eral Open Market Committee last met six weeks ago, economic data have seen ripples of distor-tion from the multiple hurricanes of late summer, including rebounds in home construction and industrial output, for example.

And a key measure of con-sumer inflation posted its first gain in nine months in October, though this was partly driven by the cost of hotels and lodging, which rose as people left home to flee Hurricanes Harvey and Irma. The Fed’s latest nationwide

survey of the economy also con-tained reports of rising prices and worker pay, just the thing the central bank watches closely.

But the underlying trends have not changed much: an economy humming along at near three percent quarterly growth, robust-but-slowing job creation and record low unemployment, accompanied by weak inflation and sluggish wage gains.

The absence of inflation has baffled Fed officials and led to a split among those who want to go slow, and those who want to hike more quickly before price increases hit the economy.

Fed governor Jerome

Powell (pictured), President Donald Trump’s pick to lead the central bank starting in Febru-ary, testified last month that the case for a rate hike was “coming together,” in an unusually strong hint about the likely move this week.

But Chicago Federal Reserve Bank President Charles Evans, currently a voting member of the FOMC, questioned the need to raise rates again so soon, and said the central bank could sim-ply sit on its hands “until the middle of next year.”

How a massive tax cut that slashes corporate tax rates to 20 percent from 35 percent might change the outlook for the econ-omy and inflation remains unclear as estimates vary widely. Much depends on the final details and when they take effect.

According to economists at Goldman Sachs, the version of the tax bill adopted by the Sen-ate could boost growth by 0.3 percentage points over the next two years -- before turning flat or even negative the following year.

Ian Shepherdson of Pan-theon Macroeconomics said tax

cuts at full employment “make no sense” and could drive the unemployment rate to three percent.

“You might think that’s impossible,” he said in a client note, “but note that 108 metro areas... already had sub 3.5 per-cent unemployment rates in September.”

But economist Diane Swonk said the plan was not likely to change the Fed’s path all that much since most analysts say the tax cuts will favor the wealthy.

“We know the economic effects are smaller... which doesn’t make or break your monetary policy,” she told AFP.

Policymakers are also likely to wait until the tax plan is adopted before baking it into their economic forecasts, she added.

Jared Bernstein, who served as economic advisor to former Vice President Joe Biden, said faster growth or even lower unemployment due to the tax cuts would produce a predicta-ble reaction from the central bank.

“If they smell any fire, they’ll raise rates faster than they would have otherwise,” he told AFP.

With the world’s largest economy growing and near full employment the central bank has long been expecting to see signs of inflation in the pipeline.

Bangladesh wants to ‘wipe out’ Manila bank for heist roleDhaka

Reuters

Bangladesh’s finance minister said he wanted to “wipe out” a Philip-

pines bank that was used to channel $81m stolen from the Bangladeshi central bank’s account with the Federal Reserve Bank of New York last year.

Abul Maal A Muhith was responding to questions from reporters about a Reuters story on Friday that said Bangladesh Bank had asked the New York Fed to join a lawsuit it was considering fil-ing against Manila-based Rizal Commercial Banking Corp (RCBC) seeking damages.

“The Bangladesh Bank has taken a decision (on fil-ing a suit). They will let me know. We haven’t so far taken any steps as the Philippines government was taking care of it (investigating the heist),” Muhith said.

“But it seems Rizal bank has been playing delinquent. We want to wipe out Rizal bank from the world.”

Muhith did not elaborate. He did not respond to requests seeking comment.

Unidentified hackers stole the money using fraudulent orders on the SWIFT pay-ments system. The money was sent to accounts at RCBC and then disappeared into the casino industry in the Philippines.

Nearly two years later, there is no word on who was responsible and Bangladesh Bank has been able to retrieve only about $15m, mostly from a Manila junket operator.

The Philippine central bank fined RCBC a record one billion pesos ($20m) last year for its failure to prevent the movement of the stolen money through it.RCBC has said it would not pay any compensation toBangladesh Bank and that Dhaka bank bore responsibility for the theft since it was negligent.

25MONDAY 11 DECEMBER 2017 BUSINESS

Ex-UK brokers in Luxembourg bet on BrexitLuxembourg

Bloomberg

Two former London brokers in Luxem-bourg have hit on an old-fashioned way to hedge against Brexit.

Briton Mark Hollis, 50, and his Irish business partner John Heffernan, 52, set up a grocery store, offering financiers fleeing the City a steady supply of UK sta-ples such as Yorkshire Tea and Marmite yeast extract.

The pair say “Home from Home,” which also sells expat favorites such as Heinz baked beans in tomato sauce and Nes-tle chocolate milkshake mix, is already bustling ahead of the hordes of financiers expected to swap London for new lives in the Grand Duchy.

“We’ve been open a few weeks and we’ve had hundreds of people come through the door,” said Hollis, who moved from Lon-don with his wife in 1997.

In the race to attract London business after Brexit, Luxembourg has already become the nation of choice for several insurers, funds and banks.

Insurance giant American International Group Inc, US insurer FM Global, RSA Insurance Group Plc and Lloyd’s of London insurer Hiscox Plc, as well as pri-vate-equity firm Blackstone and

asset managers such as M&G Investments, all have chosen Lux-embourg as their new EU hub. JPMorgan Chase & Co also plans to move some London-based bankers to Luxembourg.

While Hollis describes Brexit as “a joke,” he admits that “poten-tially, it does bring us more clients.”

“There are some financial companies, I think it’s over 20 now, that said they are going to relocate to Luxembourg. It’s mainly funds and insurance com-panies,” he said. “Coming from the finance industry myself, I know that a lot of banks have contin-gency plans in place,” said Hollis, who worked half his life as a bro-ker, the last 16 years for Tradition SA.

Their shop is in the busy com-muter town of Strassen, close to Luxembourg City, the nation’s capital. It served its first custom-ers just before Halloween and with Christmas around the cor-ner, its owners say the shop is paying its way. Traditional Eng-lish sausages, bacon and crumpets are among the biggest hits.

Hollis and Heffernan are thankful for the financial backing of the Luxembourg government as well as their parents. They scraped together around €40,000 ($47,100) of their own money to invest in the shop and got another €38,000 from the state, which

had to approve their project first.Luxembourg is the biggest

fund market in Europe, and the second-biggest in the world after the US Capital markets, wealth management as well as private banking and cross-border insur-ance and re-insurance remain some of the main specialties of Luxembourg’s financial center. It’s also the base for several EU insti-tutions, including the EU’s top courts, the European Investment Bank and the European Stability Mechanism.

Still, the country has a repu-tation as a place people either love or hate -- rather like Unilever’s sticky brown Marmite that some, but not all, Brits like to spread on their toast.

Hollis and Heffernan, who have piled their shelves with the stuff, have both learned to embrace life in the Grand Duchy and they expect enough like-minded financial workers to make the switch.

Heffernan, who worked as a foreign-exchange broker with Tullet Prebon before switching careers, said moving to Luxem-bourg from London in 2002 was “the best move I ever made.”

His three children went through the local school system and are finishing high school in one of several new free-of-charge English-speaking local schools that have popped up around the

city over the last year.On top of Luxembourg’s mul-

ticulturalism, the use of the English language has become more common. While French was the dominant language until not long ago, English can these days be heard almost as much in the country’s city center, or even in its EU institutions.

Hollis and his family live in the town of Biwer, close to the Ger-man border, “because close to the city was too expensive.” While liv-ing further out has beautiful countryside all around, it also means a longer commute to work on increasingly clogged roads.

Besides stocking up on Christ-mas puddings and crackers (nearly as complicated to explain as cricket and definitely not some-thing you smear with Stilton cheese), the duo is already busy planning a tea shop where fami-lies can come for cakes, crumpets and scones.

The UK and the EU struck a deal to unlock divorce negotia-tions in the early hours of Friday after months of stalemate.

Brexit may be good for his business, but Hollis finds it hard to hide his disdain for those who wanted to leave -- including all of his family back home.

“I think it’s completely the wrong decision for the UK to have taken,” he said. “They voted for it, so they have to get on with it.”

BlackRock buying bonds most at risk from added Fed hikesNew York Bloomberg

To BlackRock Inc’s Rick Rieder, lost in the discus-sion about the flattening

US yield curve is the fact that shorter-dated Treasuries are the cheapest on a relative basis in a decade.

Two-year Treasuries yield about 1.8 percent, rising from 1.25 percent just three months ago. As a result, the extra yield that investors get by extending to 10-year notes shrank to as little as 50 basis points last week, the smallest spread since 2007. The curve flattening makes sense -- the Federal Reserve is set to raise rates this week and projects more hikes in 2018. The two-year note is the most sensitive coupon maturity to central-bank policy.

Bond traders have already built in a buffer against further tightening, with the two-year yield more than 60 basis points above the effective fed funds rate.

Granted, if the Fed sticks to its projected path of three more hikes in 2018, short-term yields will climb even higher. But Colin Robertson at Northern Trust Asset Management only sees one 2018 hike. And for Rieder, who expects three, the value is still

there, given that the investor would only hold the debt for a couple of years.

“We like the front end of the curve -- you carry really well in the front end for two years, three years,” Rieder, global chief investment officer for fixed-income at BlackRock, said in a Bloomberg Television interview Friday.

For all the talk about inter-national buyers swooping in to buy long-term Treasuries and compressing the yield curve, the difference in yield on short-dated securities across countries is pretty stark too.

Investors pick up an extra 253 basis points from owning two-year Treasuries rather than their German counterparts. That’s the most since 1999.

And it wasn’t that long ago that the yield now available on the two-year US maturity was the best one could hope for on a 10-year note. Four days before the 2016 American presidential election, the 10-year yield closed at 1.78 percent.

“To me, two years at 1.8 per-cent look very attractive,” Robertson, head of fixed income at Northern Trust Asset, said in an interview. Traders are mis-taken if they’re anticipating “a lot of moves from the Fed.”

QATAR STOCK EXCHANGE

QE Index 7,827.71 0.70 %

QE Total Return Index 13,126.61 0.70 %

QE Al Rayan Islamic Index 3,070.47 1.28 %

QE All Share Index 2,210.34 0.81 %

QE All Share Banks &

Financial Services 2,495.59 0.54 %

QE All Share Industrials 2,393.62 1.20 %

QE All Share Transportation 1,582.73 0.82 %

QE All Share Real Estate 1,579.42 2.39 %

QE All Share Insurance 3,036.06 0.54 %

QE All Share Telecoms 976.19 0.68 %

QE All Share Consumer

Goods & Services 4,481.90 0.46 %

QE INDICES SUMMARY QE MARKET SUMMARY COMPARISON WORLD STOCK INDICES

GOLD AND SILVER

10-12-2017Index 7,827.71

Change 54.12

% 0.70

YTD% 25.00

Volume 5,889,145

Value (QAR) 108,127,849.92

Trades 2,637

Up 29 | Down 12 | Unchanged 107-12-2017Index 7,773.59

Change 24.51

% 0.31

YTD% 25.52

Volume 9,012,749

Value (QAR) 180,014,817.00

Trades 3,416

EXCHANGE RATE

GOLD QR148.8390 per grammeSILVER QR1.8898 per gramme

Index Day’s Close Pt Chg % Chg Year High Year Low

All Ordinaries 6060.807 30.949 0.51 6124.7 5635.1

Cac 40 Index/D 5391.26 16.91 0.32 5536.4 4733.82

Dj Indu Average 24140.91 -39.73 -0.16 24534.04 19184.74

Hang Seng Inde/D 28303.19 78.39 0.28 30199.69 21883.82

Iseq Overall/D 7008.79 36.22 0.52 7157.43 6369.05

Kse 100 Inx/D 38819.87 -1087.45 -2.72 53127.24 39462.71

S&P 500 Index/D 2629.27 -0.3 -0.011409 2665.19 2245.13

Currency Buying SellingUS$ QR 3.6305 QR 3.6500

UK QR 4.8327 QR 4.9598

Euro QR 4.2454 QR 4.3700

CA$ QR 2.8084 QR 2.8866

Swiss Fr QR 3.6303 QR 3.7406

Yen QR 0.03169 QR 0.03273

Aus$ QR 2.7016 QR 2.7838

Ind Re QR 0.0559 QR 0.0572

Pak Re QR 0.0348 QR 0.0347

Peso QR 0.0712 QR 0.0726

SL Re QR 0.0235 QR 0.0239

Taka QR 0.0435 QR 0.0444

Nep Re QR 0.0361 QR 0.0357

SA Rand QR 0.2626 QR 0.2784

26 MONDAY 11 DECEMBER 2017BUSINESS

The GOP tax plan on the cusp of becoming law diverges wildly from the promises President Donald Trump and top advisers said they would deliver for the middle class - an evolution that shows how traditional Republican orthodoxy

swamped Trump’s distinctive brand of economic pop-ulism as it moved through Washington.

The bill was supposed to deliver benefits predomi-nantly to average working families, not corporations, with a 35 percent tax cut Trump proposed on the campaign trail as part of the “Middle Class Tax Relief and Simplifi-cation Act.”

“The largest tax reductions are for the middle class, who have been forgotten,” Trump said in Gettysburg, Pennsylvania, on October 22, 2016.

But the final product is looking much different, the result of a partisan policymaking process that largely took place behind closed doors, faced intense pressure from corpo-rate lobbyists and ultimately fell in line with GOP wish lists.

As top lawmakers from the House and the Senate now rush to complete negotiations to push the tax plan into law, it amounts to a massive corporate tax cut, with uneven - and temporary - benefits for the middle class that could end up increasing taxes for many working families in future years.

All told, the plan would cut taxes for businesses by $1 trillion, would cut an additional $100bn in changes to the estate tax for the wealthy, and spreads the remaining $300bn over 10 years among all households at every income level.

White House officials defend the tax bill emerging from the House and Senate negotiations, saying it follows through on Trump’s long-held promise of benefits for the middle class through a combination of exempting more income from taxation, expanding a tax credit benefiting families and cutting business taxes in a way that will flow through to workers in the form of higher wages.

“The middle class gets a tremendous benefit,” Trump said on Wednesday.

Yet a review of more than 40 public statements that stretch back to the 2016 campaign and interviews with key officials in the White House and Congress shows how Trump and his top advisers have continuously prioritised corpo-rate cuts - even though they have promised that middle-class cuts would be their focus.

Over several months, tax cuts for families were either stymied or scaled back. And corporate benefits only grew, a development that increasingly made some Republicans nervous as they saw the bill’s true impact.

“Fundamentally, the bill has been mislabeled. From a truth-in-advertising standpoint, it would have been a lot simpler if we just acknowledged reality on this bill, which is it’s fundamentally a corporate tax reduction and restruc-turing bill, period,” said Republican Mark Sanford. “I think they were particularly concerned about innuendo and what that might mean, so it was labeled as a middle-class tax cut.”

After Trump was elected, his transition advisers faced immediate questions about whether he’d hold true to his promise of a tax cut focused on the middle class.

They could not have been clearer.“Any reductions we have in upper-income taxes would

be offset by less deductions, so there would be no absolute tax cut for the upper class,” Steven Mnuchin, Trump’s national finance chairman and future Treasury secretary, told CNBC.

Senator Ron Wyden, the ranking Democrat on the Sen-ate Finance Committee, dubbed it the “Mnuchin Rule.”

After Trump was sworn in, his top aides immediately began discussions with House and Senate leaders on how to combine his campaign promises with long-held GOP views that cutting taxes for the wealthy and corporations ultimately benefit workers.

The European Central Bank (ECB) will spend 2018 guiding its bond-buying pa to a gentle halt as the eurozone benefits from the most-synchronised economic growth in

two decades, according to a Bloomberg survey.

Policy makers, who have already agreed to halve monthly purchases to €30bn ($35bn) starting next month, will taper them to zero in the final three months of the year, the poll of economists showed. Still, most respondents said that decision won’t be taken until June or July as Pres-ident Mario Draghi and his colleagues fret about upsetting markets by signalling an exit from crisis measures too soon.

“As things currently stand, we don’t see much action from the central bank in the first half of 2018, with a very much steady-as-she-goes policy remaining in place,” said Alan McQuaid, chief econo-mist at Merrion Capital in Dublin, Ireland.

The survey points to a relatively quiet policy meeting on December 14, when the highlight will be the ECB’s updated esti-mates for economic growth and inflation. Those figures will include the first projec-tions for 2020, and will emphasise how far the Frankfurt-based central bank is lagging behind some of its counterparts.

The US Federal Reserve, which has already started shrinking its balance sheet to unwind its quantitative easing (QE), is set to announce its third interest-rate increase of the year on Wednesday, and signal more for 2018. The Bank of Eng-land will probably stay on hold when it sets policy on Thursday, less than an hour

before the ECB, though that’s after it hiked rates last month for the first time in a decade.

The 19-nation euro area is enjoying its strongest economic growth in a decade and the most broad-based since 1997, yet the ECB has pledged to buy bonds until at least September -- taking its total hold-ings to more than €2.5 trillion euros.

“Because of limited domestic infla-tionary pressure, the price outlook remains weak in the region and Bloomberg Eco-nomics expects this will push central bankers toward extending the asset-pur-chase programme one last time, beyond September, for a further six months at a reduced pace.”

The ECB has pledged to hold interest rates steady until well after it stops net asset purchases. The deposit rate is at a record-low minus 0.4 percent, and most economists predict an increase no sooner than the second quarter of 2019.

That leaves the focus in coming months on the policy language. Officials currently use forward guidance to promise to keep buying debt until inflation is back on track to the goal of just under 2 percent -- a level not seen on a sustained basis in almost five years.

Executive Board member Benoit Coeure has said he expects the link between QE and inflation will be able to be loosened before September. Chief econ-omist Peter Praet has said guidance will focus increasingly on interest rates as the end of bond-buying nears.

“The ECB is likely to maintain the view that rates will stay at present lev-els well into 2019,” said Elwin de Groot, senior market economist at Rabobank NV in Utrecht, Netherlands. “Establish-ing a link between rates policy and the achievement of its inflation goal makes sense.”

When Draghi addresses reporters on

Thursday, he’ll almost certainly stress that even after the ECB stops adding to its holdings, support will continue to come from reinvestment of maturing debt. Most respondents in the survey said they expect reinvestments to continue for at least two years after net asset pur-chases end -- and it could be far longer.

“With policy rates at their lower bound and accumulated assets approach-ing self-imposed limits, reinvestments become the major source of flexibility,” said Kristian Toedtmann, an economist at DekaBank in Frankfurt. “The ECB could reinforce the effectiveness of the asset-purchase programme if it commit-ted to continue with reinvestments for several years.”

Ari NatterBloomberg

A business-backed group that rose to prominence by prodding state legislatures

to cut taxes, environmental regu-lations and gun restrictions, now finds itself at a crossroads amid declining membership and a bit-ter dispute over climate change.

The battle at the American Legislative Exchange Council erupted at the group’s winter meeting in Nashville, Tennessee, this week as members scrapped a

measure declaring that climate change is not a risk after opposition from ExxonMobil Corp and Chevron Corp.

“It was corporate blackmail,” said Steve Milloy, a policy adviser for the Heartland Institute, a group critical of climate science. “They basically said, ‘We’re going to leave.’ “

The dispute over the climate provisions highlights the internal discord for the Arlington, Virginia-based group, which gained fame fighting President Barack Obama’s regulatory agenda. Over the past five years, more than 100 businesses left the organization, illustrating corporate concerns that the group may be going too far.

ALEC, which has been funded by companies like Koch Industries Inc and coal giant Peabody Energy Corp, has 2,000 mostly Republican state legislator members, which it pairs with representatives from corporations and free-market interest groups. In recent years it

debated model measures for state legislatures that take aim at state renewable energy requirements, set stricter voter identification requirements and would have U.S. senators appointed by state legislatures, not elected.

But those debates have been contentious, and turned the group into a bogeyman for consumer and environmental groups concerned about how corporate priorities can be pushed into the agenda of states nationwide. And that pressure has led to some internal woes.

Over the past five years ALEC has shed more than 100 members including Ford Motor Co and Expedia Inc, largely over its position against climate rules, renewable energy and other issues that don’t jive with corporations’ publicly stated sustainability goals.

“Companies will come and go, and we’ve added companies too,” Jason Saine, a North Carolina House member who is ALEC’s incoming chairman, said in an interview.

“We’re healthy and the organization is growing. ALEC has matured over the years and learned how to have these discussions in a mature way, so we can talk about them.”

Despite the high-profile company departures, ALEC says that it has about 300 corporations and other private members, such as trade groups and lobbyists, that are part of the group. It’s overall revenues have increased in recent years, from $8.4m in 2012 to $8.9m in 2015, the most recent year available, according to its tax returns.

Nick Surgey, director of Documented, a watchdog group that investigates the link between corporations and public policy, says the corporate defections have led to free-market activist groups with harder-edged views moving in to fill the void at ALEC.

“That vacuum is being filled by a radical agenda and these really extreme ideas are coming to the forefront,” Surgey said.

As 1,000 attendees munched on beef short ribs and deviled eggs with okra at the Omni Hotel Nashville, a top topic of discussion was the climate measure, meant to encourage states to prod the Environmental Protection Agency to rescind its determination under Obama that climate change is a risk to human health and welfare and therefore requires regulation.

Exxon, Chevron and Honeywell International Inc. objected, telling the group it would lead to protracted litigation and create business uncertainty.

Indiana State Representative Dave Frizzell, a former national chairman of ALEC, said he told those assembled in the closed-door session that if the measure was approved it would result in a corporate exodus similar to what occurred after the group was linked to “stand your ground” gun legislation following the shooting of the unarmed black teenager Trayvon Martin in Florida in 2012.

Trump’s promise on tax bill taking a U-turnDamian PalettaThe Washington Post

ECB may top up QE once more with short taper in late 2018

People walk past ECB headquarters in Frankfurt in this file photo.

Andre Tartar, Carolynn Look andPiotr SkolimowskiBloomberg

Policy makers, who have already agreed to halve monthly purchases to €30bn ($35bn) starting next month, will taper them to zero in the final three months of the year, the poll of economists showed. Still, most respondents said that decision won’t be taken until June or July as President Mario Draghi and his colleagues fret about upsetting markets by signalling an exit from crisis measures too soon.

The battle at the American Legislative Exchange Council erupted at the group’s winter meeting in Nashville, Tennessee, this week as members scrapped a measure declaring that climate change is not a risk after opposition from ExxonMobil Corp and Chevron Corp.

Corporate revolt has ALEC at a crossroads over climate fight

BUSINESS VIEWS 27MONDAY 11 DECEMBER 2017

28 MONDAY 11 DECEMBER 2017BUSINESS

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After bitcoin’s wild week, traders brace for futures launch

sight

Reuters

The newest way to bet on bitcoin, the cypto-currency that has taken

Wall Street by storm with its stratospheric price rise and wild daily gyrations, will arrive on the wee hours today as bitcoin futures start trading.

The first bitcoin future <0#XBT:> trades are set to kick off at 6 pm EST (2300 GMT) on Cboe Global Mar-kets Inc’s (CBOE.O) Cboe Futures Exchange.

The launch has given an extra kick to the cyptocur-rency’s scorching run this year. It has nearly doubled in price since the start of December, but recent days saw sharp moves in both directions, with bitcoin los-ing almost a fifth of its value on Friday after surging more than 40 percent in the pre-vious 48 hours.

But while some market participants are excited about a regulated way to bet on or hedge against moves in bitcoin, others caution that risks remain for inves-tors and possibly even the clearing organizations underpinning the trades.

The futures are cash-settled contracts based on the auction price of bitcoin in US dollars on the Gemini Exchange, owned and oper-ated by virtual currency entrepreneurs Cameron and Tyler Winklevoss.

“The pretty sharp rise we have seen in bitcoin in just the last couple of weeks has probably been driven by optimism ahead of the futures launch,” said Randy

Frederick, vice president of trading and derivatives for Charles Schwab in Austin.

Bitcoin fans appear excited about the prospect of an exchange-listed and regulated product and the ability to bet on its price swings without having to sign up for a digital wallet.

The futures are an alter-native to a largely unregulated spot market underpinned by cryptocur-rency exchanges that have been plagued by cyberse-curity and fraud issues.

“You are going to open up the market to a whole lot of people who aren’t cur-rently in bitcoin,” Frederick said.

The futures launch has so far received a mixed reception from big US banks and brokerages.

Interactive Brokers plans to offer its customers access to the first bitcoin futures when trading goes live, but bars clients from assuming short positions and has margin require-ments of at least 50 percent.

Several online broker-ages including Charles Schwab and TD Ameritrade will not allow the trading of the newly launched futures from day one.

Some of the big US banks including JPMorgan Chase (JPM.N) and Citigroup (C.N), will not immediately clear bitcoin trades for cli-ents, the Financial Times reported on Friday.

Goldman Sachs Group Inc (GS.N) on Thursday said it is planning to clear bitcoin futures for certain clients.

Capital Comment

But it seems Rizal bank has been playing delinquent. We want to wipe out Rizal bank from the world. Bangladesh’s Finance Minister

Abul Maal A. Muhith

NAME IN THE MARKET: EU GROWTH TRAJECTORY

Market Talk

Five things EMs can do to woo talentThe Peninsula

Emerging market compa-nies need talent to be competitive in the global

marketplace. They have made much progress in attracting it. Barely a decade ago, most young, bright graduates in China and India preferred to work for Western companies. These com-panies paid better and offered more opportunities for profes-sional growth and advancement, according to an article published by World Economic Forum.

That was then. Now emerg-ing market companies can attract some of the best talent locally and globally, noted the article, authored by Mauro F. Guillén.

In 2016, Alibaba launched a Global Leadership Academy to offer young, aspiring managers from the US and Europe a 16-month stint at its corporate headquarters. It has already poached executives from well-established technology and financial services companies. Dr. Reddy, an Indian pharmaceuti-cal multinational, consistently wins awards in the US for being a great employer.

Fortune magazine’s latest list of the 25 Best Companies to Work For includes Natura of Brazil, Bel-corp of Peru, and Falabella of Chile. These companies have dedicated themselves to attract-ing and nurturing talent for years.

However, challenges remain. The allure of working for a West-ern company is still deeply ingrained in the hearts and minds of university graduates and mid-career managers in emerging markets. Many still believe that compensation levels, bonuses and promotions are more attrac-tive than at local firms. For aspiring managers with an essen-tially technical skillset, this assumption is correct.

But circumstances are differ-ent for those with so-called softer managerial skills. These include the ability to negotiate or work effectively in multicultural teams, complementing a core financial or marketing knowledge. As the service sector grows throughout Asia, the Middle East and Latin America, demand for talent in healthcare, the creative indus-tries, and professional services will soar. Consider South Korea, which has already made the tran-sition from being predominantly

a manufacturing hub to a more diversified service-driven econ-omy. It has created more than four million highly-qualified service jobs in the past decade. As China undergoes a similar transition, it will require at least 40 million educated profession-als in the 25 largest cities alone. In the Indian economy, which is far less dependent on manufac-turing for growth, demand for this type of talent is even greater.

China has the advantage of a vibrant university system that churns out the largest number of graduates of any country in the world. But it lacks the dyna-mism of India’s younger population, which seems to have an almost unlimited supply of technical graduates across a number of critical fields. Brazil and Mexico are also starting to reel from smaller young age cohorts.

Competition for talent in China will be acute. This is likely to lead the country’s emerging, rapidly-growing firms to redou-ble their efforts at attracting talent, including from abroad. Future strategies for talent development in emerging mar-kets must address at least five

key areas:- Allocating resources to

education, not just in technical fields but also in soft skills.

- Ensuring that employment conditions and career prospects at the largest emerging market multinationals continue to improve, so that working for them is at least as attractive as working for a Western firm.

- Attracting talent from other countries to positions both in the home country and around the world.

- Making life in the largest cities of the emerging world more pleasant, convenient and affordable.

- Ensuring that local firms do not have to pay a premium for talent. In the long-term, this would undermine the competi-tiveness of both companies and the economy.

Companies in emerging markets cannot win the compe-tition for talent by themselves. A country’s physical infrastruc-ture, education and quality of life are key factors. Only collabora-tion with governments, from the local to national level, will achieve the outcome these com-panies need.

Pound to face twin forces of BoE and Brexit once again this weekLondon

Bloomberg

With an initial Brexit deal out of the way, pound traders will be

focusing on whether optimism over that lasts and shifts the Bank of England’s thinking this week.

Even with an agreement to move Brexit talks on to trade and no expectations for the BOE to change interest rates on Thursday, news on either front could drive the currency, according to Jeremy Stretch, Canadian Imperial Bank of Commerce’s head of Group-of-10 currency strategy. BOE Governor Mark Carney has tied the next policy shift to the suc-cess of the Brexit negotiations.

“The first thing is whether the positive initial interpreta-tions of the Brexiteers persist,” said Stretch. “That we could not break early-week highs in cable

is perhaps instructive of the understanding of hurdles ahead.”

The pound fell Friday on profit-taking after the deal was announced and extended losses as a European Union official said a trade pact was not real-istic by March 2019, when Britain is due to leave the EU.

A Cabinet meeting Tuesday may provide further details on the UK government’s thinking, said Stretch, while economic data including inflation, retail sales and job-market figures could also move the pound if showing any further widening in the gap between prices and income.

“As negotiations continue in the background, Brexit fatigue may set in among inves-tors, with more emphasis placed on the day-to-day data,” said Karen Ward, chief market strat-egist for Europe and the UK at JP Morgan Asset Management.